Premier Group (PMRJ.J) of South Africa announced a significant surge in their yearly profits, attributing it to their successful implementation of strategies to offset the expenses associated with the nation’s severe and recurrent power outages. However, the potential escalation of power interruptions poses a substantial challenge for the company in meeting the ever-growing demands of its esteemed clientele.
During the fiscal year concluding on March 31st, the renowned manufacturer of Blue Ribbon bread and Snowflake flour, which commenced trading on the local stock exchange in March, achieved an impressive increase of nearly 40% in their profitability.
Furthermore, the company revealed that it had allocated approximately 32 million rand ($1.66 million) towards the procurement of diesel generators. This expenditure was disclosed by Premier Group’s CEO, Kobus Gertenbach, who informed Reuters that it was an additional cost incurred on top of substantial investments made over several years.
In addition, Gertenbach emphasized that the company’s overall capacity to utilize generators for bakery operations was not excessively costly when considering the industry as a whole. He explained that the added expenses amounted to only a few cents per loaf, a relatively small cost that could be easily recuperated through market adjustments.
Nevertheless, Gertenbach pointed out that approximately 10% of the total flour milling production was adversely affected during the mentioned period due to the occurrences of power cuts.
To date, the state-owned utility Eskom has implemented power cuts up to “Stage 6,” necessitating the shedding of 6,000 megawatts from the national grid. However, there is a looming possibility that Eskom might escalate to “Stage 8,” which would require a shedding of up to 8,000 megawatts. This would translate to 16 hours of power outages within a 32-hour cycle.
Since its listing in March, Premier Group has experienced a decline of more than 12% in its market value. The latest trading session saw the company’s shares priced at 5,251 cents per share, marking a decrease of over 4.5% for the day.